On January 1 2013 Lessard acquired 80 of the share #16

On January 1, 2013, Lessard acquired 80% of the share capital of Honey for $264,800. This
was suf?cient for Lessard to gain control over Honey. On that date, the statement of ?nancial
position of Honey consisted of: Share capital .......... $250,000Retained earnings.......
18,000Liabilities........... 197,000............... $465,000Cash............ $ 35,000Inventories..........
70,000Land ............ 65,000Plant and equipment—net... 170,000Trademark..........
100,000Goodwill .......... 25,000............... $465,000 All of Honey’s identi?able assets and
liabilities were recorded at fair value except for:All of Honey’s identi?able assets and liabilities
were recorded at fair value except for:Additional information: 1. The plant and equipment had a
further ?ve-year life and was expected to be used evenly over that time. The trademark was
considered to have an inde?nite life. 2. Lessard uses the partial goodwill method. 3. During the
year ended December 31, 2013, all inventories on hand at the beginning of the year were sold,
and the land was sold on October 1, 2013, to another company for $80,000. 4. The income tax
rate is assumed to be 40%. 5. During the current year, Honey sold a quantity of inventory to
Lessard for $8,000. The original cost of these items to Honey was $5,000. One third of this
inventory was still on hand at the end of the year. 6. On January 1, 2013, Honey transferred an
item of plant with a carrying amount of $10,000 to Lessard for $15,000. The item was still on
hand at the end of the year. Honey depreciates the plant straight line over ?ve years. 7. On
January 1, 2014, Honey issued additional shares, which caused Lessard’s ownership to
decrease to 75%. Honey now has shares of $300,000. 8. Financial information for Lessard and
Honey for the year ended December 31, 2013, is shown below.Required (a) Prepare the
consolidated statement of comprehensive income and statement of changes in equity for
Lessard and its subsidiary at December 31, 2013. Lessard’s share capital at December 31,
2013 is $300,000. (b) Calculate the adjustments to be made to the following accounts on the
statement of ?nancial position accounts as at December 31, 2013 with respect to the Honey net
assets that would be included on the Lessard consolidated ?nancial statements: •Plant and
Equipment (net) •InventoryGoodwill • Non-controlling Interest (c) Calculate the effect on
consolidated equity of the issuance of the additional shares on January 1, 2014.View Solution:
On January 1 2013 Lessard acquired 80 of the share

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